Belize Electricity Limited - your power company, is bankrupt! At least that's what the Prime Minister said today at his quarterly press conference which was held at the Biltmore.

The power company has been crying on hard times for years and even though it grossed 186 million dollars last year - and its sales are robust - the company says it can't meet its debt obligations or its power purchase payments.

The Prime Minister said he spoke with CEO Lyn Young on Monday who told him that if the company is to continue operations going forward, it will need a government bailout - further to a letter of credit which government had already guaranteed.

Prime Minister Dean Barrow"What I gather is that basically, BEL is bankrupt. Now as I said, how it got there, and what happened when BEL was making huge profits, is quite another story. But I saw in the newspaper that Mr. Lynn Young basically said, "Well, we don't have any money to pay for energy from CFE, the Mexicans who supply us with the bulk of our power. We don't even have any money to pay our sister company, BECOL, from which we get the hydropower. And so basically, power will be cut off, the country will be plunged into rolling, if not a continuous black outs, and Government better solve it." Well, I'm not sure if the way - let me put it this way. Goverment will solve it. I'm not sure that there will joy on the part of BEL and its parent company, Fortis, in terms of how Government will solve the problem. But to that extent, Mr. Young is absolutely right. This government has a responsibility to its people, to the consumers, and Government will not allow a situation to occur in which this county is not guaranteed a stable supply of electricity. The Government is prepared to do whatever is necessary to assure a stable electricity supply to this country. This government, the party that is now in government, was always ideologically opposed to the privatization of essential resources. So, wherewithal apart, as a matter of philosophy and what conviction and what we think is right, we believe that the people of this country should own BEL."

And while Barrow certainly played up to an audience dominated by dozens of workers with the Southside Poverty Alleviation project - turning this press conference, unfortunately, into a sort of pep rally - the practical considerations of BEL's imbroglio are certainly daunting.

The company's hard and fast position is that under the current regulatory framework - it cannot continue to be viable - meaning basically that it wants a big raise in rates, which the PUC refuses to give. In fact the PUC says BEL actually owes consumers!

The Prime Minister discussed the differences between BEL and the PUC:

Prime Minister Dean Barrow"Mr. Young then says, "But, the banks will be prepared to lend us if you, Mr. Government, can guarantee that the PUC will in effect, consent to an almost - my words, not his, and I am interpreting as best as I can - an almost unlimited rate increase. Now, ladies and gentlemen, if I ever did that I would need to have my head examined, or perhaps taken off by the Belizean people. First of all, we don't tell the PUC what to do. The PUC is there as an honest broker between BEL and the consumers, and as I said, there is legal regulatory framework."

And so, how far is government prepared to go to stabilize the power supply and rectify affairs at a bankrupt BEL?

Remember, government already owes compensation for one utility company - that's BTL and is fighting lawsuits all over the world to try and settle that case.

So the last thing it would seem to need is another take-over headache. But the prime minister empathically declared today the philosophically - public utilities should be in the hands of the Belizeans people:

Prime Minister Dean Barrow"But if BEL can't get money to pay for energy, then it seems to me that BEL is on the brink of becoming non-operational. And I am saying to you, ladies and gentlemen, that the Government of Belize cannot have that happen. I will try to report again to you as quickly after that meeting on Friday, as I can. They're at the margins, so Mexico is threatening to cut us off again. Government is prepared to pre-pay another couple of months electricity bills, 4 million dollars, and that will buy us 12 days or so. And it is my promise to the Belizean people, that within that 12 days, a solution will be found."

As a flourish, The Prime Minister speculated that with BEL in its present troubles, unable to pay for power, unable to pay its debt - the company's shares may actually have a negative value.

And while all that talk floats in the electronic ether - on Friday the Prime Minister expects to get down to brass tacks when he meets with BEL CEO Lyn Young after he returns to the country on Thursday.

We have been reporting on the precarious financial situation of Belize Electricity Limited and whether or not there will be blackouts. The issue of its nationalization was dealt with squarely by Prime Minister Dean Barrow today. B.E.L. has been unable to keep current with payments to suppliers, primarily the Comision Federal de Electricidad to which, it owes eight million dollars. Added to that there is a twelve million dollars debt to its sister company BECOL and a court case worth fifty million dollars with the Public Utilities Commission. C.E.O., Lynn Young, appealed to the government to pay at least four million dollars to keep the lights on for the next two weeks. But what is the future of B.E.L. and is the government going to take over the company? At his quarterly press conference today, P.M. Barrow, went as far as to say that while it is a question of ideological conviction, government should own essential services.

Dean Barrow

Dean Barrow

“I don’t want to prejudice negotiations with B.E.L., but I am telling you that there will be a solution. I have in my mind the team, the Cabinet has in its mind the outlines of the solution, but a lot will depend on how the talks go with B.E.L. We already had some confirmation of how serious the situation is. In terms of my phone call with Lynn Young, it appears B.E.L. has no answer. Well that is unacceptable. I don’t know where Mister Young went—perhaps he went to Canada, perhaps he went to talk to Fortis. So when he comes back in the country and we meet on Friday, he may have some solution to offer us in the interests of B.E.L. and the interests of consumers. So I really want to wait to speak with him before I report to you on how things are progressing.

“This government, the party now in government, was always ideologically opposed to the privatization of essential resources. So wherewithal apart—as a matter of philosophy and conviction and what we think is right—we believe that the people of Belize should own B.E.L. We believe that the people of this country should own B.T.L.; we believe that the people of this country should own Belize Water Services. That is a philosophical, ideological conviction if you will.

If we could wave a magic wand or snap our fingers to get back B.E.L. thereby, we would do it immediately. We know, especially if you are talking about a bankrupt company, that it would be a hell of a challenge going forward, but we would be left with no alternatives to secure the interests of people and we would also be doing what we inherently believe is correct—have the government and people of this country own the essential services. In terms of compensation, I am telling you that we are going to sit down and have what I hope will be an amicable meeting with Lynn Young. I am not telling you that government is looking to nationalize by force B.E.L. at all.”

The Prime Minister made a stunning announcement during his quarterly press conference held on Wednesday June 8th at the Biltmore Hotel. That announcement was that it appears that Belize Electricity Limited is apparently bankrupt. PM Barrow explained that he was not sure how BEL got to where it is currently but based on requests made from BEL to the government and based on conversations with BEL officials BEL does not have money to pay for power that it is purchasing from CFE and BECOL. The Prime Minister added that if the matter is not addressed the country would be plunged into blackouts. To this however he emphatically stated that “government will solve it!” He continued saying that “government has a responsibility to its people to the consumers and government will not allow a situation to occur in which this country is not guaranteed a stable supply of electricity.”He added that, “if BEL can’t get money to pay for energy then it seems to me that BEL is on the brink of becoming non-operational and the government of Belize cannot have that happen.”

BEL’s financial crisis has had BEL ask GOB to make pre-payments for electricity supplied and government has been making those prepayments. The Prime Minister also noted that BEL’s CEO Lynn Young has asked that government increase its letter of guarantee to the Comission Federal de Electricidad up to 20 million dollars from where it stands at 10 million dollars currently. The PM explained that in a phone conversation held with Young on Monday of this week, Young explained that the company has no money and that it is unable to secure funding from banks because of ongoing problems between BEL and the PUC. Prime Minister Barrow however was quick to point out that the problems were of BEL’s own doing. He explained that any utility in any country in the civilized world is subject to regulation and BEL is no different. PM Barrow told the nation that when things were good the PUC told BEL to give back to the consumers and instead of doing so it went to the court and got an injunction and now the company cannot come back for a rate review since there are proceedings in the courts. He further added that Young told him that the banks would be willing to lend to BEL if the government is willing to give BEL an unlimited rate increase which BEL will impose on consumers and the government will simply not allow that. More than not allowing it PM Barrow stated that “if I ever I did that I would have to have my head examined and perhaps taken off by the people of Belize!” On the matter of raising the letter of guarantee to 20 million dollars the PM point blankly stated that the government cannot be carefree with taxpayers money. For the meanwhile however the government will be prepaying 4 million dollars to BEL which will give BEL 12 days or so of power supply and the Prime Minister explained that, “within those 12 days a solution will be found.” He continued, “This country under this government will not be plunged into blackouts.We are going to assure a stable supply of electricity for this country. The government is prepared to do whatever is necessary to assure a stable electricity supply to the country.”

Asked if government would buy back BEL and what compensation would be considered the Prime Minister stated that compensation would be a question of how much since they are broke and can’t go forward since it is burdened with a mountain of debt. He went as far as contemplating the possibility that the shares in BEL may have a negative value.

For the time being however the Prime Minister will be having a meeting with CEO Lynn Young on Friday to chart a way forward.

After Wednesday’s press conference in which Prime Minister Dean Barrow dropped the bombshell that he might have to consider nationalizing Belize Electricity Limited, the nation has been on edge on both the possibility of blackouts and the effects on investors’ confidence if another company is nationalized. B.E.L. has been unable to meet debt obligations or pay dividends because the utility company claims it has been losing money since the P.U.C. denied a rate increase and the price of fuel is keeping operation costs high. A critical meeting is set for this Friday between the prime minister and B.E.L. C.E.O., Lynn Young, from which government may arrive at a decision on whether or not it will take control of B.E.L. Here’s an excerpt of what the Prime Minister said on Wednesday.

Dean Barrow

Dean Barrow

“This government, the party now in government, was always ideologically opposed to the privatization of essential resources. So wherewithal apart—as a matter of philosophy and conviction and what we think is right—we believe that the people of Belize should own B.E.L. We believe that the people of this country should own B.T.L.; we believe that the people of this country should own Belize Water Services. That is a philosophical, ideological conviction if you will.

If we could wave a magic wand or snap our fingers to get back B.E.L. thereby, we would do it immediately. We know, especially if you are talking about a bankrupt company, that it would be a hell of a challenge going forward, but we would be left with no alternatives to secure the interests of people and we would also be doing what we inherently believe is correct—have the government and people of this country own the essential services. In terms of compensation, I am telling you that we are going to sit down and have what I hope will be an amicable meeting with Lynn Young. I am not telling you that government is looking to nationalize by force B.E.L. at all.So, the hard place in which B.E.L. finds itself with respect to the P.U.C. in my view is principally of its own making. But if B.E.L. can’t get money to pay for energy, then it seems to be that B.E.L. is on the brink of becoming non-operational. And I am saying to you ladies and gentlemen that the government of Belize cannot have that happen. I will try to report again to you as quickly after that meeting on Friday as I can. There are at the margins, so Mexico is threatening to cut us off again. Government is prepared to prepay another couple months of electricity bill—four million dollars—and that will buy us twelve days or so. And it is my promise to the Belizean people that within that twelve days a solution will be found.”

Today, all over Belize, many questions are being asked: Will B.E.L. be able to pay its mounting debts? Will the government continue to prepay its electric bills to ease B.E.L.’s cash flow? Will there be rolling blackouts? Would the P.M. dare to nationalize yet another private company? B.E.L. has warned that the company, due to high fuel costs and litigation with the P.U.C., may be unable to make payments to its main power supplier in Mexico, the Comision Federal de Electric to which it owes eight million dollars. The outcome of the much anticipated meeting could determine if Belizeans must prepare for rolling blackouts in the near future or the nationalization of yet another large company by this government. We’ll be monitoring developments closely.